VANCOUVER — Proposed expansion of the liquefied natural gas (LNG) industry in British Columbia carries significant economic risks for private and public sector proponents, according to a new report by Carbon Tracker, an international financial think tank that specialises in the impact of the energy transition on capital markets.
Turning Tides: The economic risks of B.C.’s LNG expansion in a changing energy market, which was supported by the Pembina Institute and David Suzuki Foundation, compares the economics of all currently proposed LNG projects globally that have yet to reach final investment decision. It concludes that the four LNG terminals still awaiting final investment decision in B.C. are likely to lose out to competition from producers in Qatar, the US and Mozambique – where significant volumes will be able to be supplied at lower prices.
Meanwhile, based on expected operational dates and current development timelines, B.C.’s industry will ramp up just as global LNG production is expected to plateau, making it a late entrant to a market dominated by established incumbents with better opportunities for economies of scale.
These assessments are based on underlying data that shows the global LNG market is likely to be oversupplied by the end of this decade, as a glut of new production comes online. According to the International Energy Agency, there is already enough existing global LNG infrastructure to meet the level of demand that is likely to be in place by 2040 - even in its slowest energy transition scenario.
Quotes
“This report is a reminder that, under a shifting global market for natural gas, these projects carry significant economic risk. That risk extends beyond the private companies who wish to build and operate LNG infrastructure, to the government, if it subsidizes the construction, operation or the decarbonization of the LNG terminals and upstream production of gas. B.C. taxpayer dollars should be leveraged to attract low-carbon investment in clean growth industries as a priority over additional investments in plateauing fossil fuel markets.”
— Janetta McKenzie, Oil and Gas Program Manager, Pembina Institute
“With the extraordinary rise of inexpensive renewables, it's clear that fossil fuels will play a smaller and smaller role in global energy systems. This report highlights the big economic risk facing those in B.C. backing further expansion of the liquefied natural gas industry. B.C. is late to the LNG race, it is a high cost producer and it would be wise to heed the evidence that the economic outlook for LNG is risky. With a glut of LNG and declining demand by the end of this decade, it's better to focus on investing in clean energy with long-economic growth dividends.”
— Thomas Green, Senior Climate Policy Adviser, David Suzuki Foundation
“Demand for gas is predicted to peak by 2030, and the global LNG market is facing a glut of new supply in the next few years. Our research shows LNG projects in B.C. will be outcompeted on price by other producers and, by the time they come online, will be late entrants to an already crowded LNG market. This report is a warning to investors, policymakers, and communities - returns from new projects are a risky bet.”
— Maeve O’Connor, Analyst, Oil, Gas and Mining, Carbon Tracker
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Visit the Pembina Institute’s website to download a copy of Turning Tides: The economic risks of B.C.’s LNG expansion in a changing energy market.
Contact
Alex Burton
Communications Manager, Pembina Institute
825-994-2558
Theresa Beer
Communications and Policy Specialist, David Suzuki Foundation
778-874-3396
Daniel Cronin
US Communications Manager for Carbon Tracker
617-678-5263
Background
Report: Squaring the Circle: Reconciling LNG expansion with B.C.’s climate goals
